Which age group pays the most for car insurance?

Young drivers ages 16-24 are the age group that pays the most for car insurance at average rates of $272.12/mo. Once a driver turns 25, the average car insurance rates go down for that age group.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jan 19, 2021

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Here's what you need to know...

  • Young people who have just gotten their license pay the highest for car insurance at average rates of $272.12/mo
  • Once a person reaches 25 years of age, their insurance premiums tend to go down
  • There are many discounts a young person can look for to help keep their premiums manageable

When it comes to obtaining car insurance policies, not all drivers are created equal.

Indeed, insurance companies are notorious for breaking consumers into certain demographic groups and basing their policy rates on each group’s tendency to get into accidents (or stay out of them) and the likelihood that they’ll file a claim with the company.

It’s a process known as risk assessment, and it’s how insurance companies make their money. It’s also how drivers in at least one age group end up paying sky-high premiums while their slightly older siblings, parents, or grandparents pay far less per month for the same coverage.

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Young Drivers: The High Cost of Being New to the Road

It’s commonly thought that the last milestone of youth is reaching the long-sought “drinking age” when turning 21 years old. But there is another, even more elusive age that almost everyone counts down to.

When a driver turns 25 years of age, their average car insurance premium price goes down dramatically to compensate for:

  • Estimated eight or nine years on the road
  • College degree
  • Full-time job
  • Better driving habits
  • Overall lower risk posed to the insurance industry at large

Until they reach the quarter-century mark, drivers between the ages of 16 and 25 are the recipients of the highest-priced insurance coverage in the country.

That’s largely because these drivers are notorious for engaging in bad habits.

Each year, insurance companies deal with an increasing number of accidents involving young drivers who were talking on the phone, texting, playing their music too loud, drinking and driving, or simply not paying attention to the road.

The frequency and severity of these accidents has necessitated a significant surcharge for those young drivers who are still getting a feel for the road and all that is required to navigate the road safely.

In many cases, car insurance premiums for drivers under 25 can be as much as 20 or 30 percent higher than those drivers over the age of 25. Here are some tips on how to save money on car insurance when you’re under 25.

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Enter your ZIP code below to view companies that have cheap car insurance rates.

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Surviving a Near-Decade of Higher Car Insurance Premiums

While the cost of insurance a vehicle may be elevated for the youngest drivers on the road, they’ve also got access to some built-in advantages with insurance companies that help bring down other costs so that they can still afford to pilot a vehicle.

The first of those advantages is that most young drivers, at least until they are out of college, are typically placed on their parents’ car insurance policy. They typically get a discount for this, as well as for insuring multiple vehicles under the same policy umbrella.

Furthermore, as a young driver navigates the open road without an incident for several years, they will actually see a drop in their car insurance premium amounts over time.

It’s not the same as the discount enjoyed by older drivers, but it’s still a noticeable decrease for safe driving. It should be considered a small reward for putting the phone down, keeping the music quiet, and keeping both eyes on the road.

Young drivers also get access to a student discount on their car insurance and they can qualify for an additional discount if they manage to get a 3.0-grade point average in their high school or college courses.

They’ll simply need to supply a transcript to the insurance company to qualify for this boost in affordability.

Of Course, it Never Hurts to Compare Rates

Young drivers and their parents don’t necessarily need to resign themselves to eight or nine years of elevated car insurance rates.

Instead, they’d be well-advised to make use of an online car insurance quote comparison tool which can help them secure the best rate on a multi-driver, multi-vehicle policy that includes an under-25 driver.

These tools are much like the quote forms supplied on each major insurance company’s website, but they merge data into a single page for easy viewing.

These comparison tools are not only a great way to compare rates, but also a great way to compare the way they address younger drivers.

Many companies have been unveiling new initiatives that specifically cater to these individuals and help them to achieve more affordable coverage, and those initiatives will be obvious when using a car insurance comparison tool and looking for disparities between the major insurers’ policy rates.

Starting the Countdown to 25

If all else fails, young drivers will simply have to wait until they turn 25 years old to enjoy car insurance premium rates which are on equal footing with those enjoyed by older friends and family members.

Unfortunately, car insurance companies don’t really budge when it comes to assessing the risk a certain driver poses to their fellow motorists; and, after all, the modern automobile has been around for a century.

Car insurance companies certainly have a long enough trend line to justify the higher price of driving when under the age of 25.

Remember to always compare rates, communicate a safe driving record to insurance companies, and use any good grades, high school or college enrollment, or driver’s education course as a way to show the insurance companies that age is not a factor in at least one young driver’s approach to the highway.

Discounts abound, and there are still many ways to help temper the cost of driving while young.

We can help you compare car insurance rates for FREE. Enter your ZIP code now!

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